There are certainly more preferable ways to learn economics than suffering a hurricane. But Irma happened, and there are economic lessons that we can learn from it.
One lesson is: Thank goodness we live when we do and where we do.
Life with electricity and water supply and sanitation systems is not just more convenient than life without them. When the power goes out and the water system stops working, life gets unhealthy and dangerous fast. Puddles of stagnant water become ripe sources of illness and disease. And good luck to you if you get sick or hurt or go into labor when there’s no power or clean running water or roads that can be traveled by car.
Yet life without electricity and running water and cars was the way life was for thousands of years, until quite recently. In 1900 — not long ago in the history of human beings — the U.S. was already the richest country in the world. In that year, 3 percent of homes had electricity and 15 percent had running water and flush toilets.
The poorest country on earth today is the Central African Republic. Life expectancy in the Central African Republic is 52. In the U.S. in 1900, life expectancy was 47, and disease from ingesting contaminated water — cholera, dysentery, typhoid and others — was a leading cause of death.
Life without power and a functioning water system for four days after Irma was a worrisome burden. Imagine living your entire life without them. The fact is that we here in 2017 in the U.S. and a few other choice spots on the planet are by far the richest people in the history of the human race.
How did that happen?
Ideas. We are the beneficiaries of a combination of revolutionary ideas that brought about the miracle of modern economic growth that economist Deirdre McCloskey calls the Great Enrichment.
First came the idea, which caught hold in the late 16th century, that knowledge, especially scientific knowledge, can and should be used to improve the everyday lot of humankind.
Mix that with the humanist ideas of the European Enlightenment — in particular the idea that the world of here and now is important and should be made better — and the revolutionary Enlightenment ideas about economic liberty: that people have the right to offer their labor services to any employer they choose, that they have the right to enter markets to sell goods and services without restraint by government or competing producers and that to engage in such productive economic activity is good for humanity.
The consequence of people living those ideas has been the utterly astounding enrichment of living standards of the past 200 years.
In 1800, income per person in the United States was roughly $1,000 — in today’s dollars. In 1900, it was about $5,700. Today, it’s $46,400. That’s an increase in living standards since 1800 of a factor of 46. There is nothing comparable in human history.
It’s ironic — capitalism is really not about the accumulation of capital, physical or financial. What makes capitalism capitalism is ideas: about liberty, innovation, entrepreneurship and the moral value of creating things that improve people’s lives.
Enjoy your electricity and running water.
Reg Murphy Center